US households are receiving far fewer offers for credit cards these days and, increasingly, the offers they do receive are for cards carrying an annual fee according to Mail Monitor, the direct mail tracking service from Synovate.
During Q1 2009, US households received 372.4 million offers, representing a dramatic 67% drop from the 1131.6 million offers received during Q1 2008. Twenty-seven percent of offers carried an annual fee during Q1 2009, up from 18% one year ago.
“As issuers continue to cut back offers and the mailbox becomes more superprime we are seeing a proportionately higher number of card offers with an annual fee,” said Andrew Davidson, Vice President of Competitive Tracking Services for Synovate’s Financial Services Group.
Fee based cards now reflect an increasing proportion of both reward/rebate and non-reward/rebate card solicitations. In Q1 2009, 24% of reward/rebate offers carried an annual fee versus 18% in Q1 2008. At the same time, 42% of non-reward/rebate offers carried an annual fee versus 19% in the prior year.
“Many issuers have scaled back significantly and some have been relying more on proven co-branded airline programs, which typically carry an annual fee. At the same time, the mass exodus from the subprime space means issuers with fee-based models, such as First Premier, are becoming more dominant in the category,” said Davidson. “There is a great deal of speculation as to what the credit card industry will look like once the Credit Cardholders Bill of Rights comes into effect but, while the majority of offers continue to carry no fee, we may already be moving in the direction of a fee-based model.”
According to Mail Monitor, cardholders that currently own a fee-based card typically own multiple cards but have just one fee-based card in their wallet. The fee-based card is also the card that tends to be used most often.
“If this trend continues, the battle for share of wallet will intensify,” predicted Davidson. “In a fee-based environment, consumers will be more likely to own just 1 or 2 credit cards and will not have the appetite for the level of multiple card ownership that has fuelled the growth of the industry in recent years.”
About Mail Monitor
Synovate Mail Monitor tracks credit card acquisition volumes and response rates throughout the US, and evaluates attitudes, behaviours, terms, and usage for each card in consumers’ wallets. It is a service of Synovate's Financial Services Group, which generates consumer insights that drive competitive marketing solutions in the banking, investments, insurance and payments industries. For more information about Mail Monitor visit www.synovate.com/mailmonitor.
About Synovate
Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,700 staff in across 62 countries. More information on Synovate can be found at www.synovate.com.
Contacts:
Synovate
Andrew Davidson
+1 212 293 6122
andrew.davidson@synovate.com
or
Jennifer
Chhatlani
+1 312 526 4359
jennifer.chhatlani@synovate.com